UPDATED: Report predicts billions in motor fuel tax revenue losses if state meets EV goals

UPDATED: Report predicts billions in motor fuel tax revenue losses if state meets EV goals

By NIKA SCHOONOVER
Capitol News Illinois
nschoonover@capitolnewsillinois.com

SPRINGFIELD – Despite Illinois’ efforts to smoothly integrate electric vehicles into the state’s economy, a new report from the Illinois Economic Policy Institute is warning of a potential steep decline in transportation revenue as the process of electrification accelerates.

The primary issue is motor fuel taxes, which will see a significant drop as more electric vehicles make their way to the road and fewer people fill their cars with gas.

Since motor fuel taxes make up the backbone of state funding for road and bridge projects, ILEPI, which has strong ties to organized labor, warned in its report that new revenue sources will have to be identified to ensure the state’s 10-year capital improvements plan remains on track.

“There’s absolutely a benefit to having EVs but it will ultimately have a strong impact on transportation funding,” Mary Tyler, the author of the report, said in an interview. “It’s something that I don’t think is talked about enough.”

Motor fuel tax is the state’s leading source of transportation funding and makes up 52 percent of Illinois’ total transportation revenue and 82 percent of its contributions to the federal highway trust fund.

The report’s main policy recommendation is implementing a vehicle miles traveled, or VMT, fee which would replace the existing motor fuel tax with a fee determined by the number of miles a car travels on Illinois roads. 

The idea has been floated in the past, including by Gov. JB Pritzker in an interview with The Arlington Heights Daily Herald during his initial gubernatorial campaign in 2018.

“In some states (such as Oregon), they have done tests recently for a VMT tax because we have more and more electric cars on the road, more and more hybrids, and because gas mileage is rising,” then-candidate Pritzker told the outlet. “It’s only fair if you’re on a road and traveling on that road that you should pay your fair share.”

In his four years as governor, however, Pritzker has not made a serious legislative push for a VMT, and spokesperson Alex Gough said in an email Monday he has no plans to do so.

“Gov. Pritzker never proposed a vehicle mileage tax and has no intention of doing so now,” Gough said in a statement. “What he said is that other states are studying the issue and it would be worthwhile to look at the results of those studies.”

It’s an issue that ILEPI says will become more pressing as the state moves toward its goal of putting 1 million electric vehicles on state roads by the end of the decade – a goal written into law with the passage of the Climate and Equitable Jobs Act in 2021.

Even before this promise was made, Illinois was seeing a yearly increase in electric vehicles. From 2017 to 2021, electric vehicle registrations have increased from 8,255 to 36,482. The most recent data from the Illinois Secretary of State’s office shows that, as of December 2022, there are 57,311 electric vehicle registrations.

“Looking at the growth we’re seeing, we’re seeing it grow at a faster rate than what we ever have before,” Tyler said.

According to Tyler’s estimate, Illinois would have to add 119,000 electric vehicles every year in order to meet their goal of one million by 2030. If that came to fruition, the state would lose $765 million in combined sales and motor fuel tax when accounting for added EV fees. Counting federal revenues, that figure would jump up to $1.1 billion.

Electric vehicles aside, Tyler said fuel-efficient vehicles pose an additional threat to the state’s transportation revenue. Roughly 10 percent of registered vehicles in Illinois are electric, while the rest of the 11 million are increasingly becoming more fuel-efficient.

“If you take a look at the picture of all the vehicles on the road, as newer vehicles come out that are more fuel-efficient, that means we’re just having overall, on average, a more fuel-efficient fleet,” Tyler said.

Tyler calculated that the total state and federal revenue loss over the next decade would be about $4.3 billion.

That loss would be especially threatening to the back half of Pritzker’s historic 10-year, $45 billion capital infrastructure plan known as Rebuild Illinois.

The roads-and-bridges portion of the 2019 program was made possible in large part by doubling the state’s motor fuel tax, which hadn’t seen an increase since 1990, then tying it to inflation in subsequent years.. The infrastructure plan also increased Illinois’ annual electric vehicle registration fee by $100 annually.

Tyler said while the fee hike helped replace some of the lost revenue, it won’t go far enough.

“As soon as the change can be made, the better,” Tyler said. “Even to this day, there are EVs on the road that are not paying as much as they would be on motor fuel tax. So there is an impact, it’s just right now the impact isn’t as big as what it will be in the future.”

In response to questions about revenue declines, Gough, Pritzker’s spokesperson, said Rebuild Illinois “is a six-year plan that relies on a variety of revenue streams to ensure the state can continue investing in infrastructure once the plan is complete.”

Other policy areas to explore, Tyler suggests, include increasing existing registration fees even further, implementing a separate hybrid vehicle fee and creating an electric vehicle-specific kilowatt-per-hour fee.

Editor’s note: This story has been updated with a statement from the governor’s office that was received after initial publication.

 

Capitol News Illinois is a nonprofit, nonpartisan news service covering state government. It is distributed to more than 400 newspapers statewide, as well as hundreds of radio and TV stations. It is funded primarily by the Illinois Press Foundation and the Robert R. McCormick Foundation.

Leave a Comment





Local News

Sorry, we couldn't find any posts. Please try a different search.

Neighbors

Sheri Cannataro, of Cannataro Farms, demonstrates the gear she wears to extract honey from a bee hive for visitors who stopped by to see her products at the Hills Chamber of Commerce Business and Community Expo Saturday at Conrady Junior High School in Hickory Hills. (Photos by Joe Boyle)

Residents warm up to Hills Chamber Business Expo

Spread the love

Spread the loveBy Joe Boyle Spring has arrived but winter continues to leave its calling card. However, that did not prevent the Hills Chamber of Commerce from holding its 10th annual Business and Community Expo Saturday at Conrady Junior High School in Hickory Hills. While the temperatures were frigid and windy outside, the spirit inside…

Palos Park Mayor Nicole Milovich-Walters speaks about zoning codes at the March 25 council meeting. (Photo by Jeff Vorva)

Palos Park to tweak outdated village zoning codes

Spread the love

Spread the loveBy Jeff Vorva The village of Palos Park has no grand plan to change the village landscape. But officials want to modernize some of its zoning codes. “The village has not comprehensively updated its development regulations since 1960,” Mayor Nicole Milovich-Walters said at the March 25 village council meeting. “Due to this, there…

Ridgeland sd122 logo

SD122 psychologist resigns over Islamophobic posts

Spread the love

Spread the loveBy Nuha Abdessalam A psychologist for Ridgeland School District 122 has resigned after hundreds of parents demanded she be fired for social media posts that were pro-Israeli and anti-Palestinian. District Supt. Joseph Matise announced at a schoolboard meeting last week that Dr. Laurie Hoke had resigned. “Dr. Hoke will no longer be working…

CRR_NH

Clear-Ridge Reporter and NewsHound March 27, 2024

Spread the love

Spread the love

Mary Stanek

Will the month of March leave like a lion?

Spread the love

Spread the love. By Mary Stanek Your correspondent in Archer Heights and West Elsdon 3808 W. 57th Place •  (773) 517-7796 . The days are getting longer and slightly warmer. But my prediction of a few weeks ago–March is certainly not leaving like a lamb–may prove to be correct. A sure sign of spring in…

Peggy Zabicki

Robin sighting a sign of new beginnings

Spread the love

Spread the love. By Peggy Zabicki Your correspondent in West Lawn 3633 W. 60th Place •  (773) 504-9327 . I saw a robin the other day. This was the first sighting of the season for me. I remember my mom saying that the first robin of spring is a promise of new beginnings. May it be so. Is…

SRP-IMAGE-Logo

Thome sweet Thome: Nazareth baseball defeats Hall of Famer Jim Thome’s alma mater

Spread the love

Spread the loveBy Jeff Vorva Correspondent The Nazareth baseball team took a road trip to the middle of Illinois and improved its record to 7-0 on March 23 by beating Limestone, 6-0. Limestone is the alma mater of former White Sox player and Baseball Hall of Fame member Jim Thome, who is an assistant coach…

SRP-IMAGE-Logo

Chicago Catholic League greats headed to Hall of Fame

Spread the love

Spread the loveBy Jeff Vorva Correspondent A handful of area stars will be inducted into the Chicago Catholic League Coaches Association Hall of Fame. The list features Kevin Bracken (St. Laurence, wrestling), Kevin Carberry (St. Rita, football), Matt Macievic (De La Salle, cross county and track), Mike McGrew (Mount Carmel, football), Dan Nicholson (Brother Rice,…

SRP-IMAGE-Logo

Fire II tops Chicago City, advances to to second round of Hunt Open Cup

Spread the love

Spread the loveBy Jeff Vorva Correspondent The Chicago Fire II picked up a late invitation to the Lamar Hunt U.S. Open Cup and beat Chicago City, 6-0, on March 20 in front of an announced crowd of 810 at SeatGeek Stadium. Defender Giovanni Granda and midfielder Vitaliy Hlyut each made their professional debut and scored…

Julia Bianchi heads back on defense shortly after delivering a first-half goal for the Chicago Red Stars on March 23 at SeatGeek Stadium in Bridgeview. Photo by Jeff Vorva

Red Stars top Seattle, open season with two wins for first time in franchise history

Spread the love

Spread the loveBy Jeff Vorva Correspondent Last year’s last-place finish notwithstanding, the Chicago Red Stars have had a pretty rich history of success. The franchise has seven NWSL playoff appearances and has finished runner-up twice (2019, 2021), and prior to 2022 had finished no lower than fourth in the league ‘s regular season standings for…